OBJECTIVES: Chronic low-back pain related to osteoarthritic changes of the lumbar spine has a significant economic impact on healthcare budgets worldwide. Anterior-Lumbar-Interbody-Fusion (ALIF) surgery can be an effective treatment option after non-operative therapy fails. Frequently, the affected vertebrae are fused together using bone (autograft) from patient's hip, which requires additional surgery and leads to increased co-morbidity, blood loss, infection rate, and pelvic instability. We assessed the cost-effectiveness of rhBMP-2 compared with autograft in spine fusion surgery over two years from both a healthcare payer's and societal perspectives in Sweden and Denmark. METHODS: An economic model was developed to evaluate differences in the two-year results between spine-fusion surgery with rhBMP-2 and fusion with bone autograft. The cost and health-related quality-of-life associated with both arms were estimated for two years after surgery. Data were obtained from a previously published analysis of pooled data, in which patients in the rhBMP-2 arm showed significant clinical improvements after surgery compared to standard therapy. Costs were obtained from NordDRG and DkDRG and are reported in 2005 values. RESULTS: In Sweden, from the health care payer's perspective, using rhBMP-2 (€2800) lead to an incremental cost-effectiveness ratio (ICER) of € 7,311/QALY, whereas in Denmark, using rhBMP-2 (€3100) lead to an ICER of € 10,475/QALY. Significant reduction in secondary interventions, and better fusion rates associated with rhBMP-2 treatment resulted in faster return to work and reduced productivity loss. Therefore, rhBMP-2 was a dominant treatment option from societal perspective in both countries. These savings offset the upfront cost of rhBMP-2 therapy. CONCLUSION: The standard use of rhBMP-2 in ALIF surgery is a cost-effective treatment option in Sweden and Denmark from the payer's perspective and a cost-saving option from the societal perspective, both in Sweden and in Denmark.